Policy Instruments to Lean Against the Wind in Latin America

113 Pages Posted: 19 Jul 2011

See all articles by G. Terrier

G. Terrier

International Monetary Fund

Rodrigo Valdés

International Monetary Fund (IMF)

Camilo E. Tovar

International Monetary Fund

Jorge A. Chan-Lau

International Monetary Fund (IMF) - International Capital Markets Department

Carlos Fernández-Valdovinos

Independent

Mercedes Garcia-Escribano

University of Chicago - Department of Economics

Carlos I. Medeiros

International Monetary Fund (IMF)

Man-Keung Tang

International Monetary Fund (IMF)

Mercedes Vera-Martin

affiliation not provided to SSRN

W. Christopher Walker

International Monetary Fund (IMF)

Date Written: July 2011

Abstract

This paper reviews policy tools that have been used and/or are available for policy makers in the region to lean against the wind and review relevant country experiences using them. The instruments examined include: (i) capital requirements, dynamic provisioning, and leverage ratios; (ii) liquidity requirements; (iii) debt-to-income ratios; (iv) loan-to-value ratios; (v) reserve requirements on bank liabilities (deposits and nondeposits); (vi) instruments to manage and limit systemic foreign exchange risk; and, finally, (vii) reserve requirements or taxes on capital inflows. Although the instruments analyzed are mainly microprudential in nature, appropriately calibrated over the financial cycle they may serve for macroprudential purposes.

Suggested Citation

Terrier, Gilbert L. and Valdés, Rodrigo and Tovar, Camilo E. and Chan-Lau, Jorge Antonio and Fernández-Valdovinos, Carlos and Garcia-Escribano, Mercedes and Medeiros, Carlos I. and Tang, Man-Keung and Vera-Martin, Mercedes and Walker, W. Christopher, Policy Instruments to Lean Against the Wind in Latin America (July 2011). IMF Working Paper No. 11/159, Available at SSRN: https://ssrn.com/abstract=1888902

Gilbert L. Terrier

International Monetary Fund

700 19th Street, N.W.
Washington, DC 20431
United States

Rodrigo Valdés

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Camilo E. Tovar

International Monetary Fund ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

HOME PAGE: http://blog-imfdirect.imf.org/bloggers/camilo-e-tovar/

Jorge Antonio Chan-Lau

International Monetary Fund (IMF) - International Capital Markets Department ( email )

700 19th Street NW
Washington, DC 20431
United States

Mercedes Garcia-Escribano (Contact Author)

University of Chicago - Department of Economics ( email )

1126 East 59th Street
Chicago, IL 60637
United States

Carlos I. Medeiros

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Man-Keung Tang

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Mercedes Vera-Martin

affiliation not provided to SSRN

W. Christopher Walker

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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